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Representatives of the so-called Natural Gas Council Plus (NGC) group last Wednesday proposed guidelines for controlling the energy content of imported liquefied natural gas (LNG) and domestic gas streams.

Specifically, they recommended a +/-4% within a Wobbe band of 1200-1400, with a limit on butanes to 1.5 mole % and a limit on total inerts to 4%, as a guideline for the ability of LNG to be interchangeable with conventional U.S. gas supplies. With respect to controlling the hydrocarbon liquid dropout of gas within pipelines, the group reached a consensus on a technical process to determine the basis for establishing hydrocarbon dewpoint (HDP) limits, Mark Hereth, a consultant with Process Performance Improvement Inc., told FERC at its regular meeting.

The NGC has put the HDP proposal in a "simple format that people can apply anywhere along [the] system," Hereth said. The details of the proposal for setting HDP limits can be found in the NGC's white paper, entitled "Liquid Hydrocarbon Drop Out in Natural Gas Infrastructure," which is posted on the Federal Energy Regulatory Commission's website [PL04-3].

The four proposed parameters for LNG interchangeability, which would apply at the citygate, create an "envelope that provides for safe [and] reliable" pipeline systems, as well as assures of sufficient natural gas supply, he said. Hereth noted there were four parameters because "there is no one parameter that can help drive this."

The group's recommendations were the result of "dozens and dozens" of technical meetings in Washington, DC, and Houston over the past year, during which the industry reached out to its entire customer base, said Skip Horvath, president of the Natural Gas Supply Association, an NGC member. In late 2003, NGC established an industrywide coalition to develop guidelines and specifications for the quality of domestic gas entering pipelines, as well as the interchangeability of LNG with U.S. gas supplies.

Based on NGC's recommendations, Horvath said FERC has at least four "tough calls" to make: 1) decide the procedural vehicle (policy statement, rulemaking, et al) that it's going to use to place gas quality specifications in pipeline tariffs; 2) decide the procedural application of the +/-4% parameter; 3) face the dilemma of how to prevent local standards from driving the least common denominator for the whole country; and 4) translating citygate specs into something that can be applied upstream.

Donald Santa Jr., president of the Interstate Natural Gas Association of America (INGAA), said the technical committees of the NGC coalition recommended that additional research and development be conducted with respect to LNG interchangeability. Specifically, they proposed that a joint private-government funded program undertake testing of the safety and environmental performance of end-use equipment. The effort would cost $5 million and would last about two years, he said.

If the testing is successful, it could increase the +/-4% parameter to +/-5%, which would greatly expand the range of gases that would be interchangeable with LNG, according to Santa.

Both Horvath and Santa believe that the Department of Energy should oversee the R&D effort into LNG interchangeability. But a representative for appliance manufacturers suggested that private industry head up the effort instead.

FERC Chairman Patrick Wood questioned whether the industry could wait for the results of two years of R&D on the LNG interchangeability issue. "The future is here," he said at the meeting. But Santa noted the natural gas industry would not be without direction in the meantime. It could use the +/-4% parameter as an interim guideline over the next two years, while the R&D program is carried out, he said.

As the agency's first step, Wood said it will seek public comments on two industry white papers addressing HDP and LNG interchangeability, which were released by the NGC last Monday and can be found on FERC's website. Horvath urged FERC to challenge the industry after the comments are in by calling a technical conference to discuss the issues.

The interchangeability issue rose to the forefront because much more regasified LNG is expected to be introduced in the U.S. gas stream from LNG imports, prompting pipelines to worry about the impact of the Btu-rich gas on the integrity of their systems. Local distribution companies (LDCs) are concerned about the safety of regasified LNG. There also are potential costs for industrial customers to modify their equipment to accept this gas. The key concern is the extent to which LNG-sourced gas can replace conventional gas without unduly interfering with the operation of pipe, LDC and end-use facilities.

Rising hydrocarbon content in domestic gas entering pipelines became a pressing issue over the last couple years as gas prices rose while prices for natural gas liquids did not keep up, prompting producers to keep liquids in their gas streams. Industry members, particularly pipelines and LDCs, urged FERC to approve tighter restrictions on domestic gas quality. Pipelines contend that hydrocarbon-rich gas leads to liquids fallout, which causes operational problems on their systems.

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